Seeks bank's sponsorship of school project in lieu of interest
9-8-1999 | IslamWeb
Question:
Instead of accepting interest from bank on our account, we have asked bank to sponsor on a different project in the school. What is the ruling according to shariah?
Answer:
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.
First of all, you should know, dear brother, that dealing with Riba (usury and/or interest) is one of the grave major sins and Allaah threatens whoever is involved in it with severe punishment. Allaah Says (what means): {O you who have believed, fear Allaah and give up what remains [due to you] of interest, if you should be believers.}[Quran 2:278] Furthermore, the Prophet 
said: "Allaah has cursed the one who consumes Ribaa (i.e. usury or interest), the one who gives it to others, the one who writes it down and the one who witnesses it." He added: "All of them are equal in sin." [Muslim]
If one deposits his money in a bank which deals with Riba, or that one deposited his money there while not knowing the ruling about it and then he came to know the ruling, and the interest is paid on this money without any prior agreement or condition, then the interest should be spent on charity projects, such as helping the poor, those in debt and building schools. However, he should not keep it for his own use as this money is harmful for Muslims to keep, because it is ill-gotten money. Therefore, spending it on the things that benefit the Muslims is better than leaving it for them [banks] to use it in what Allaah has forbidden.
Therefore, it is forbidden for whoever knows the ruling to deposit money in these Banks unless he is in case of necessity, like if he fears that his money will be stolen while there is no Islamic bank where he lives, or there is no secure place where to keep his money.
However, if he deposits his money in a bank, he should avoid putting it in a saving account, but he should deposit it in a saving account without any interest.
If this is the case, then it is not permissible for the bank to sponsor a project at the school as this is committing a prohibition which is dealing with Riba with this institution.
Finally, we ask Allaah to enable you to do that which is good and make you a source of benefit for the Muslims.
Allaah Knows best.